Federal Student Loan Consolidation: What It Is & When You Should Use It

Federal Student Loan Consolidation: What It Is & When You Should Use It

Financing college and grad school these days is no small task.  With tuition costs rising every single year, graduates today are exiting school with laundry lists of student loans.  Each one with a different rate, a different servicer, and often with different terms.  Sounds confusing, no?

The Federal Direct Consolidation Loan repays your existing federal student loans and replaces them with one loan at a fixed rate.  This can be beneficial for a few reasons.  It reduces the number of loan servicers you’ll need to deal with, replaces variable interest rates with fixed, and helps you qualify for flexible repayment options your original loans may not have been eligible for.

 

How it Works

The direct consolidation loan replaces your outstanding federal loans with one combined loan at a fixed rate.  This can be very convenient.  Loan servicers are prone to making clerical errors, so dealing with only one will probably make your life a whole heck of a lot easier.

Continue reading